Why Does Environmental Policy in Representative Democracies Tend to Be Inadequate? A Preliminary Public Choice Analysis

Sustainability 2010, 2, 3710-3734; doi:10.3390/su2123710

sustainability ISSN 2071-1050

www.mdpi.com/journal/sustainability

Review

Why Does Environmental Policy in Representative Democracies Tend to Be Inadequate? A Preliminary Public Choice Analysis

Andrea Kollmann 1 and Friedrich Schneider 2,*

1 Energy Institute, Johannes Kepler University, Linz, Altenberger Straße 69, 4040 Linz, Austria;

E-Mail: [email protected] 2 Institute of Economics, Johannes Kepler University, Linz, Altenberger Straße 69, 4040 Linz, Austria

* Author to whom correspondence should be addressed; E-Mail: [email protected];

Tel.: +43-732-2468-8210; Fax: +43-732-2468-8209.

Received: 4 October 2010; in revised form: 15 November 2010 / Accepted: 22 November 2010 /

Published: 30 November 2010

Abstract: There is a widespread consensus among the most important players in developed

countries (voters, politicians, producers, traditional and green interest groups and

bureaucracies) that a shift towards an eco-social market economy is essential for

sustainable growth. Nevertheless, market-based instruments have not as yet been

implemented satisfactorily in environmental policy. To identify the reasons for this

insufficient implementation over the past decade, the Public Choice theory is used. The

players’ behavior is analyzed in order to show that their incentives for implementing

market-based instruments in environmental policy, instead of command-and-control

measures, are surprisingly weak. Knowing the obstacles to implementing market-based

instruments provides valuable insight into how to overcome them.

Keywords: public choice and environmental policies; sustainability; voters; government;

interest groups; tradable permits; green taxes [D23, D62, D72, D73, H23, Q57, Q58]

1. Introduction

“A survey of 40 leading US economists in 1998 found that that there is little agreement among them

as to which of thirteen national tax and regulatory reforms are desirable public policies, with the

exception that all support a proposed 25¢ per gallon fuel tax increase.” [1]

OPEN ACCESS

Sustainability 2010, 2

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At least since the Fourth Assessment Report of the IPCC was released in 2007, the need for

ambitious global action to combat climate change is more pressing than it ever was. Nevertheless, the

UN Climate Change Conference in Copenhagen, held in December 2009, failed to reach its main

objective: a legally binding agreement on an amendment to the Kyoto Protocol that would enable a

second commitment period to follow the end of the first commitment period in 2012. The so called

Copenhagen Accord of 18 December 2009 was neither adopted nor endorsed by the Conference of the

Parties, which simply took note of it. Hence uncertainty about the future of the global climate regime

as designed by the Kyoto-Protocol is growing. The greenhouse gas reduction targets laid down in the

Kyoto-Protocol are only binding until 2012 and the prospects of setting legally binding targets beyond

that date are hard to assess.

As an important player in the Kyoto process, the E.U. decided to base its climate policy on using

market-based instruments in environmental policy. Especially the adoption of Directive 2003/87/EC of

the European Parliament and of the Council of 13 October 2003, establishing a scheme for greenhouse

gas emission allowance trading (EU-ETS) within the Community and amending Council Directive

96/61 EC, has affirmed this major shift in the way environmental policy is implemented and publicly

perceived. Due to its amendment by Directive 2008/101/EC, the E.U. emission trading system

(EU-ETS) was even extended by including aviation activities. The latest amendment by Directive

2009/29/EC finally set the course for the time beyond the current Kyoto period, originally based on the

assumption that a global and comprehensive post-2012 agreement would be concluded in due time.

But also other instruments, like the car scrapping premium introduced during the recent economic

recession in various countries or the discussion about introducing a CO2 tax in some major European

countries, have created more public—and especially political—awareness of the importance of

choosing adequate instruments for environmental policy (see [2] for an overview of environmental

governance in the European Union).

One of the main reasons for this wider acceptance is certainly climate change, and particularly the

formal statement of [3] that “most of the observed increases in globally averaged temperatures since

the mid-20th century is very likely due to the observed increase in anthropogenic greenhouse gas

concentrations”, clarifying that human greenhouse gas emissions are (almost certainly) responsible for

climate change. In consequence, the Conference of the Parties in Copenhagen (COP-15) agreed to

stabilize global warming at an additional two degrees (despite the absence of binding commitments)

and the European Union decided to adapt its CO2 emissions to reach the two degree target.

Furthermore, in 2008, the E.U. climate and energy package was presented, specifying: (1) A reduction

in E.U. greenhouse gas emissions of at least 20% below 1990 levels, (2) a 20% share of E.U. energy

consumption to come from renewable resources; and 3) a 20% reduction in primary energy use to be

achieved by improving energy efficiency (known as 20-20-20 targets, see [4] for details).

Global agreements like the Kyoto protocol and multi-national agreements like the EU-ETS show a

basic willingness on the part of governments all over the world to commit themselves to

environmentally friendly policies. But this willingness is seemingly not combined with the use of

effective and efficient instruments, even though the importance of incorporating environmental goals

in the policy of industrialized countries is undisputed in comparison to other purely economic goals

like full employment (for a discussion and literature about the effectiveness of European

environmental policy see [5]). This can especially be stated for the Kyoto agreement and for the


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EU-ETS, neither of which turned out to be successful due to their design (Compare also [6], who are

critical of the European emission trading directive: They argue that it is unspecific in many respects

and leaves many decisions defining the rules of the game to the individual member state, especially the

limited scope of trading regarding geography, polluting sectors and activities reduces the quality of the

system).. They rather seem to be motivated by individual choices that differ between countries and are

subject to and defined by intra-country strategies (see [7]). Out of the EU-27 countries that ratified the

Kyoto protocol, only 16 countries have reduced their CO2 emissions, none of them substantially [8].

Whether any country has actually decreased CO2 emissions due to its facilities being part of the

EU-ETS is still subject to discussion [9]. The alleged inefficiency of the overall system has eventually

led to its redesign; the result will be implemented in the next trading period 2013 to 2020.

Furthermore, whether the instruments now in use were introduced for reasons of environmental

protection

or as a way to raise additional governmental revenues is also disputable (see e.g., [10] for a

discussion of the effectiveness of CO2 taxation in the OECD (Organisation for Economic

Co-Operation and Development)).

The aim of our paper is to apply the Public Choice approach in order to discuss why the use of

market-based instruments in environmental policy is still limited and why those instruments that are

already in place do not bring about the desired environmental results. Earlier papers tackled a similar

issue, such as [11,12] and [13]. In all these papers the basic Public Choice model is presented and not

the more recent empirical and theoretical developments from 2003 on. In our paper we focus on the

latest developments and show that in spite of some environmental policy measures (like the EU-ETS)

little has been achieved.

In accordance with Public Choice theory we do not treat the state as a uniform body but discuss the

characteristics and main interests in environmental policy of the five groups of economic

agents—voters, politicians, administrators, producers and interest groups—plus their interactions.

We assume utility-maximizing or selfish behavior for all five groups involved, but also discuss

literature findings on allowing for altruistic, pro-social and pro-environmental attitudes when assessing

economic agents’ behavior.

The paper is organized as follows: Section 2 analyzes the characteristics of market-based and

command-and-control instruments and takes a closer look at the EU-ETS and environmental taxes. In

Section 3 we discuss the Public Choice approach to environmental policy and analyze the motives of

voters, politicians, producers, interest groups and public administrators. Section 4 winds up

our discussion.

2. Choosing an Instrument: Market-Based versus Command-and-Control

Basically, three types of market-based instruments are considered in the literature: charges and

taxes, subsidies, and tradable permits. In [14] deposit-refund systems are listed as a fourth instrument,

while [15] ranks deposit-refund systems among pollution charges and lists market friction reductions

(market creation, liability rules, information programs) as a fourth type of instrument instead.

For the scope of this paper, we consider market-based instruments that encourage behavior through

price signals rather than through explicit directives. They correct prices in distorted markets, existing


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as well as evolving ones, and internalize environmental externalities at the lowest overall cost to

society. Incentives are formulated in such a way that the greatest reductions can be realized by those

economic agents with the lowest costs [15,16].

In contrast to market-based instruments are command-and-control instruments that “dictate” a

certain behavior for all economic agents or for a group of agents defined by specific characteristics.

The prescribed behavior is mandatory and deviations are subject to punishment.

Command-and-control mechanisms are criticized for being inflexible as they set uniform standards

for economic agents, regardless of the individual costs involved [15]. [17] give a set of reasons for the

continued use of command-and-control instruments. They argue that command-and-control

instruments are already familiar and that there is a comfort factor involved in knowing that every

facility is controlled. Furthermore, they point at the cultural dimension of respecting and obeying the

law, which is more apparent under a regulatory regime.

If market-based instruments are superior to command-and-control mechanism from a theoretical

point of view, the question of why there is an undersupply of them arises. [12] discuss three general

arguments against the wider use of market-based instruments:

Firstly, they argue that there are objections to the basic concept of the neoclassical model as well as

the theory of homo economicus. Secondly, they point to arguments that market-based instruments

might crowd out environmental ethics, which are essential in other policy areas. This argument has

been analyzed in a relatively new cross-disciplinary field of economic research that combines insights

from economics and psychology. [18] argue that an environmental policy via command-and-control

measures undermines environmental morale because, under a regulatory regime, individuals’

self-determination is reduced and replaced by prescriptions. Environmental morale and motivation are

important: they increase the demand for a clean environment or environmentally friendly private goods

and products, which according to [18] is manifested in hedonic market studies on the housing and

labor markets.

Environmental morale can also help to overcome the free-rider problem in public good provision.

While this reduces any intrinsic environmental behavior, it also leaves consumers informed about the

right way to behave. Whether regulations lead to the crowding out of environmental morale depends

on their design: few, easy to understand, regulations are to be favored so that consumers are not overly

governed and violations are effectively punished. They reason that “a large number of complex,

abstract and opaque regulations, on the other hand, are unlikely to improve the environment as

environmental morale will be strongly crowded out while threatened punishments are easier to

evade”. [18] furthermore find that tradable permits crowd-out environmental morale. In the case of

taxes, differentiations are made: with low taxes, consumers do not feel overly controlled, whereas the

crowding-out effect is either small or could eventually become a crowding-in effect. With intermediate

or high taxes on the other hand, crowding-out will occur.

Of the various market-based instruments, we focus our discussion on environmental taxes and

permit trade systems, as those two instruments are at the center of European environmental policy. In

theory, permit trading systems and emission taxes are equally efficient, if the tax rate is set at a level

that equals the price of the permit. But current developments show that in practice different problems

arise in the political discussion: Why is the EU-ETS not as efficient as it could be? Why are

environmental taxes difficult to impose and inefficiently designed when imposed? And finally, why


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are command-and-control measures still promoted even though their efficiency is—at least from a

theoretical point of view—inferior to market-based instruments?

In Section 3 we will look into these questions from the point of view of the most important players

in developed countries: voters, politicians, producers, interest groups and bureaucracies. Before, we

highlight the main characteristics of the EU-ETS and environmental taxes that are of importance for

our further analysis.

2.1. Permits

Taking into account the important status that the EU-ETS has reached in the meantime, and the

political and economic efforts that have been put into the development and ongoing improvement of

this instrument, its nature is worth examining. The basic concept of the EU-ETS is a cap-and-trade

system. The regulator sets an emission cap, where the level of the cap depends on how ambitious the

reduction target is. Finally, the participators in the emission trading market—the facilities—receive

individual allocations of emission allowances. Practically, two questions arise from this emission

trading design that have fundamental influence on the overall system’s efficiency: what is the cap and

how are the emission allowances allocated? For the purpose of our analysis the second question is of

special importance. Basically, two types of allocation methods are possible: Permits can either be

given out at no cost and allocated according to past emission levels (grandfathering) or they can be

auctioned off. Within the EU-ETS the grandfathering option was chosen, at least for the first

(2005–2007) and the second (2008–2012) trading periods, even though auctioning permits off is

considered the superior allocation method, for which [19] provide four reasons: Firstly, auctions are

more cost-effective given transaction costs. Secondly, the revenue raised in an auction can be used to

reduce other market distortions, because tradable permits can create market entry barriers which can be

offset if the government recycles the auction revenue by reducing preexisting distortionary taxes. The

third argument in favor of auctioning is that greater incentives for firms to develop substitutes for

CO2-intensive technologies are created. Finally, the (probably) substantial revenue that could be raised

by an auctioning procedure may provide greater incentives to administrative agencies to monitor

compliance. [20] also argue that the elimination of lobbying influence should be considered as a

further benefit of auctioning.

Grandfathering of permits in the EU-ETS has led to perverse economic results: due to extensive

lobbying activities more permits than needed were allocated in the first trading period, which led to a

vast decline in the permits price [21]. Furthermore, large emitters charged their customers for the

permits and thus received high windfall profits [21,22].

It is beyond the scope of our paper to go into detail on any other aspects of the EU-ETS, but we

refer the reader to work done by [23,24] and [19]. For the sake of our discussion, the most important

aspect of the current design of the EU-ETS is that the permit allocation method is not as efficient as it

could be, even though the superiority of auctioning over grandfathering was known ex-ante.

2.2. Environmental Taxes

The other main market-based instruments currently in use in Europe, and the widening of which is

intensively discussed in the European Union, are environmental taxes.


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Environmental taxation is not a new idea. As early as 1972 the OECD issued “Guiding Principles

concerning International Economic Aspects of Environmental Policies“ in which the Polluter-Pays

principle was presented and the idea of internalizing external effects of pollution in market prizes

was recommended.

Environmental taxes are discussed as being a policy with which a double dividend could be

realized. The double dividend hypothesis states that when taxes which cause distortions in one

economic sector are reduced and, simultaneously, taxes to reduce distortions in another sector are

introduced, overall efficiency would rise and unemployment would be reduced. If there is a double

dividend and the implementation of incentive-oriented environmental tax policies is not accompanied

by tax increases but by a shift in the tax burden, there is no longer a trade-off between fighting

unemployment and environmental policy. There is an ever growing body of literature about the double

dividend hypothesis: see e.g., [25] for a recent overview. [26] conducted a meta-analysis of 61 studies

and found that an environmental tax reform is more efficient on the environmental side than on the

economic side, but their results do not reject the double dividend hypothesis. [27] find in their meta-

regression analysis encompassing 41 studies that employment effects are negatively affected by the

stringency of environmental regulation. We reproduce their findings in a highly abbreviated way in

Table 1 which shows the ambiguity of outcomes in the literature.

Table 1. Results of studies about the double dividend hypothesis (Source: [27],

abbreviated by authors).

Study Region Emissions change

Employment effect

(% vs. BAU) (% vs. BAU)

Köppl et al. (1995) Austria –7 0,4

Capros et al. (1998) European Union –18 0,4

Bayar (1998) European Union –16 1,3

Ellingsen et al. (2000) European Union –14 1

Bosello and Carraro (2001) European Union –14 1,3

Hayden (1999) European Union –11,5 0,1

Barker and Rosendahl (2000) European Union –11,5 1,1

Barker (1998) European Union –10 1,2

Welsch (1996) European Union –6,5 1,7

Capros et al. (1996) European Union –5 0,2

Bossier and Brechet (1995) European Union –4,4 0,6

Koschel (2001) European Union 5 0,6

Welsch (1998) European Union 8,5 5,4

Buttermann and Hillebrand (1996) Germany –17,1 –0,7

DIW (1994) Germany –17,1 1,1

Meyer et al. (1997) Germany –17 3,3

Meyer (2001) Germany –16,9 1,6

Schmidt and Koschel (1999) Germany –15,5 0,6

Conrad and Löschel (2002) Germany –13,7 0,4

Schön et al. (1995) Germany –5 0

Braun and Kitterer (2000) Germany –3 1,7


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Table 1. Cont.

Study Region Emissions change

Employment effect

(% vs. BAU) (% vs. BAU)

Stephan et al. (2003) Germany –2 –0,6

Meyer zu Himmern (1997) Switzerland –15,4 0,1

Mauch et al. (1996) Switzerland –6,1 0,3

In the introduction we also raised the question of what motives could trigger the introduction of

environmental taxes in the European Union. Currently discussed, and strongly supported by the French

government, is the introduction of a CO2 tax to be levied at the European Union’s borders to reduce

trade distortions and to safeguard the competitiveness of European industry relative to large Asian

producers, especially China. The introduction of an environmental tax is mainly discussed in terms of

industries’ competitiveness, not in terms of environmental issues. Evidence for the view that

environmental taxes are introduced for budgetary and not for environmental reasons can be found

in [28]. They tested their model of the political economy of policy-making using data for the OECD,

and found that environmental taxes are set mainly with the aims of industry competitiveness and

increasing revenue, and therefore lack environmental effectiveness. Table 1 shows that for most

studies we clearly see a reduction of emissions up to –17% versus the business-as-usual scenario,

whereas the employment effect is very modest. Hence the second dividend is empirically quite weak.

2.3. Permits, Taxes and Command-and-Control Measures

From Sections 2.1. and 2.2., we conclude that there is an ambiguity between (a) knowing about the

superiority of market-based instruments, taxes and permit trading systems, in terms of efficiency, and

(b) the competing interests of all economic agents involved. Before turning to those competing

interests, we discuss the instruments’ characteristics from a global point of view to find answers to the

three questions we asked above.

Firstly, we have to ask why command-and-control measures are still favored in environmental

policy. [12] identify two reasons: the high economic efficiency of market-based instruments, and

distributional concerns.

The first argument of high economic efficiency is based on the situation of a single firm faced with

the introduction of market-based instruments: while the economic efficiency of these instruments for

the whole economy can be reasonably assumed, it is debatable whether the single firm can realize

minimum costs. [29] argue, for example, that if a tax design involves no refunding scheme, all

polluters will favor a command-and-control regime over taxes. But, assuming there is a refund system

and emission levels are heterogeneous among polluters, then refunding depends on the individual

polluting level of each facility. Uniform refunding would therefore lead to redistribution from large to

small polluters. In consequence, smaller polluters may prefer taxes, while larger producers may still

prefer command-and-control measures. The theory of lobbying behavior (see Section 3.3) points out

that smaller well organized interest groups are relatively more successful in lobbying than lobbyists

representing larger interest groups. In a world with a few large emission polluters and a large


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number of small polluters, there will be a marked tendency for the policy outcome to be a

command-and-control mechanism, even if taxes or other market-based instruments would both be

more efficient and/or effective [10].

Furthermore, within a command-and-control regime there is leeway for negotiations between the

regulating authority and the individual firm [30]. Assuming asymmetric information between the

authority and the firm, the firm certainly has superior bargaining power. In one-on-one talks the firm

can also exercise pressure by threatening to shed employees or to relocate. Another argument is the

federal structure of many European countries in which legislative power is split between regional

governments and central government. Regulating power at least partially lies with the federal states

and their authorities, while the central government exercises tax jurisdiction. In such a case the

familiarity between a firm and the relevant regional government is certainly greater than the familiarity

between the firm and central government, which will also increase individual firms’ bargaining power.

Overall, [12] conclude that regulation will be less strict with a command-and-control regime than with

market-based instruments.

The second argument of [12] is that distributional consequences arise under either a command-and-control

regime or market-based instruments. We assume a firm has identical characteristics under a

command-and-control mechanism and in a situation in which market-based instruments are used.

Under a regulatory regime, pollution for the firm is free. With market-based instruments pollution

comes with a cost when taxes are imposed and when permits are auctioned off, but is also free of costs

when permits are allocated by grandfathering. Regulation would be preferred to market-based

instruments, and grandfathered permits would be preferred to other market-based instruments or

permit allocation methods, because both exhibit an additional charge in comparison to taxes and

auctioned permits. Grandfathering additionally creates entry barriers to markets, which is another

benefit for existing firms [31].

[32] furthermore argues “that imposing an emission standard will restrict output, which in turn will

raise the price of the commodity under consideration, thereby increasing the profits of existing firms.”

Contrastingly, an emission tax would raise additional budget for the government, which is why firms

generally prefer an emission standard to an emission tax. [30] point out that one reason why “the use

of taxes to discourage polluting activities and the introduction of systems of tradable emission

allowances are now more than just ideas appearing in textbooks on the subject” is that the

shortcomings of command-and-control mechanisms have become more apparent over time. For

example the tightening of control of polluting activities gets more expensive over time, which makes

it more worthwhile to look for alternatives (see also [33] for a discussion of the costs of

command-and-control measures in the US).

At the beginning of Section 2 we posed three questions. The first one addressed the notion that

existing permit trade systems are not as efficient as they could be, because grandfathering the permits

instead of auctioning them off is only the second-best solution. We saw from the general point of view

that we took throughout this section that interest groups seem to have an intrinsic motivation to support

grandfathering, an argument that we will look at in more detail in Sections 3.3 and 3.4. The second

question, “Why are environmental taxes difficult to impose and inefficiently designed when imposed?”

can be answered either in terms of politicians’ with competing interests who want to increase

governmental revenue or with a more specific resistance towards taxes. We will discuss these aspects


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in Sections 3.1 and 3.2. The final question, why command-and-control measures are still promoted,

will also be tackled in the following section.

3. The Public Choice Approach to Environmental Policy

We now turn to the economic agents and discuss—according to Public Choice theory—the motives

or interests in environmental policy of voters, politicians, public administrators, producers and interest

groups. Figure 1 shows the interdependence of all of these parties and that in any policy process the

outcome of negotiations is one of all parties’ competing interests. In environmental policy, being a

policy that ought to preserve the common public good “the environment”, these interactions are of

great importance, as our analysis will show.

Figure 1. The interaction of economic agents from a public choice perspective.

The main focus of the following Public Choice analysis is discussing the different incentives of all

actors in general and on command-and-control versus market-based instruments. But not only is the

choice of the instrument of great importance for successful environmental policy, also the general

positions of the actors matter.


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In relation to climate change mitigation, [34] discusses seven different intellectual positions of

opponents of a stronger environmental policy: Firstly, he argues, that there is a group of people who

generally sees no need for any emission reduction policy and, secondly, some believe that any action

comes to late anyway. Both arguments can—in his opinion—be overcome by establishing the

credibility of the science (see also Section 3.1 about trust and credibility issues). Thirdly, there is

concern, that emission reductions and economic growth are incompatible. The next two positions (four

and five) he describes, are the targets of the costs of emission reductions: on the one hand, some argue

that emission reductions are too costly and on the other hand they have to be borne ‘up-front’

(see Section 3.1 for a discussion of price-elasticity and social discount rates). Furthermore

(position six), emission reduction targets are considered unrealistic and cannot be achieved due to a

lack of political will. Lastly (position seven), there is no first mover advantage involved with imposing

environmental policy. With these fundamental arguments in mind, we will now turn to analyzing the

individual position of the actors involved.

3.1. The Voters

Citizens’/voters’ sensitivity towards environmental issues has continuously increased throughout

recent decades. One indicator for this is that voters attach more and more importance to the use of

renewable energy sources. [35] show that in Germany, within the period 1984 to 2003, the public

attitude towards energy sources has shifted notably from nuclear power to renewable energy sources

(wind, solar). While in 1984 only 17% of respondents expected wind energy to significantly contribute

to Germany’s energy supply, in the following three decades the figure increased, to 42% in 2003.

Public opinion analysis, undertaken by the European Commission, shows that 50% of European

Citizens consider climate change a serious problem (see Table 2). In yet another survey for the

European Commission, 97% of respondents considered environmental protection very or fairly

important [36].

Table 2. Results of Eurobarometer survey, January/February 2009 (Source: [37]).

In your opinion, which of the following do you consider to be the most serious problem currently facing the world as a whole? Firstly? Any others?—% EU

Rank Problems 2008 2009 %-change

1 Poverty, lack of food and drinking water

67% 66% –1%

2 A major global economic downturn

24% 52% 117%

3 Climate change 62% 50% –19%

4 International terrorism 53% 42% –21%

5 Armed conflicts 38% 39% 3%

But when asked about the overall most important issues for Europe at the moment, those surveyed

put unemployment, the economic situation and crime at the top of the list, while environmental and

energy issues did not even enter the top 10 (see Table 3); they ranked 12th and 13th.


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Table 3. Results of Eurobarometer survey, October/November 2009 (Source: [38]).

What do you think are the two most important issues facing (OUR COUNTRY) at the moment?

Rank Issues Answers in %*

1 Unemployment 51%

2 Economic Situation 40%

3 Crime 19%

4 Rising prices/inflation 19%

5 Healthcare system 14%

6 Immigration 9%

7 Pensions 9%

8 Taxation 8%

9 The educational system 7%

10 Housing 5%

11 Terrorism 4%

12 The environment 4%

13 Energy 3%

14 Defense/foreign affairs 2%

* multiple answers possible.

The European Commission’s statistics raise the question of where this two-facedness among voters

comes from and whether the under-provision of market-based instruments in developed democracies is

after all still due to a lack of concern among voters, due to their competing interests or other factors. The

literature proposes a number of explanations for the voters’ behavior, which we will discuss below.

The comparatively new happiness research literature provides evidence that environmental

pollution negatively affects individual well-being [39,40]), which supports the view that the general

public has an intrinsic motivation to act in an environmentally friendly way. [41] analyze the

relationship between citizens’ satisfaction with the quality and performance of the economic and

political system they live in and environmental quality. They find that “[…] both a focus on

environmental policy and higher environmental quality (in terms of lower emissions, in particular, of

CO2, and less traffic) increase satisfaction with democracy in statistically and economically important

ways.” But they also report that a rise in public environmental expenditure tends to decrease average

satisfaction, which they interpret as a confirmation for the public good characteristics of environmental

policy and environmental quality. Furthermore, [42] show empirically that the public’s willingness to

pay to prevent small negative impacts on the ecosystem is insignificantly different from zero but

significantly positive with larger impacts.

A lack of information about market-based instruments in environmental policy, especially energy

taxes, is found in several studies (for France see [43], for Ireland see [44]; for Germany see [45]). One

line of arguments in the discussion about why market-based instruments are not satisfactorily

incorporated in environmental policies is that this lack of information on the voters’ side is too costly

to be overcome. Understanding the complexity of environmental issues requires higher education,

interest and time to learn, therefore acquiring information is subject to high opportunity costs. But [46]


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report that participants in a Danish focus group argued that “they could not accept something they did

not understand”.

However, [47] argue that information about “the need for, or characteristics of, controversial

developments has not notably delivered acquiescence on the part of local communities. On the

contrary, it can fuel distrust […]”. If only information can raise acceptance for new instruments but

information also triggers distrust in specific projects, the key target issue according to several studies is

seeking trust, as voters may simply not trust their governments. Studies for a number of European

countries show that voters especially either do not trust their governments to use the extra taxes

responsibly or see no reason for any additional tax.

In a study in Ireland, [44] report that voters are on the one hand suspicious and distrustful of their

government when it comes to tax policy and on the other hand already feel overtaxed. [43] report that

the participants in their French focus groups suggested “that politicians always thwart the allocation of

taxes”. Even stronger is a study result from Denmark in which focus group participants suppose that

environmental taxes are just another way for obtaining public revenues and that their environmental

effects were only fake [46]. A similar response is reported by [17] for the United Kingdom.

Another aspect of this trust issue is that voters believe they alone have to bear the costs. This line of

argument does have substance. Especially if price elasticity is low, the tax burden can be transferred

from producers to consumers (which—in most cases—would offend the polluter-pays principle). But

if price elasticities are high, the tax burden will be borne by producers as well as workers. [48] reports

own-price elasticities of Swedish households of –1.80 for an electricity tax, of –1.83 for a district

heating tax and of –1.58 for an oil tax. [49] report price elasticities for gasoline demand in the range of

–0.6 and –1.0. For Spain, [50] estimated the price elasticities of transport fuels at –0.32 to –0.75.

Finally, [51] also find mean short-run and long-run price elasticities of −0.34 and −0.84, respectively,

for demand for gasoline in a meta-study of 43 studies. Price elasticities for gasoline demand, for which

a large body of literature is available, tend to undermine the fear that environmental taxes may at least

partly be borne by voters alone (see Table 4).

Table 4. Price-elasticities.

Source Electricity tax District heating Oil tax Gasoline/transport fuels

[48] –1.8 –1.83 –1.58

[49] –0.6 to –1.0

[50] –0.32 to –0.75

[51] –0.34 to –0.84

Source: see reference list.

When it comes to compliancy with a specific tax regime, [52] point out that a rational voter would

try to evade taxpaying as being caught is unlikely and fines tend to be small in comparison to what can

be gained from tax evasion. The fact that taxes are paid nevertheless can be explained by tradition and

especially with trust. [52] show for Switzerland, that the more far-reaching political participation rights

are, the higher tax morale is.

Another aspect brought out in this discussion is that voters are more likely to accept a policy they

are familiar with, as is the case with regulation, in contrast to market-based instruments. [17] point out


3722

that “familiarity breeds affection: those being controlled regard it as ‘tolerable’ while an alternative

approach might not be seen as such”. A position also supported by [53], who find that people generally

dislike the word “tax” and are more willing to accept a policy that even though actually being a tax is

labeled differently. That terminology itself may have a considerable influence on acceptance is also

shown in [44] who propose to re-label taxes as charges, since “tax” is considered a “bad” word.

[12] argue that voting out of self-interest is possibly a major obstacle to any kind of environmental

policy. An interesting data set that allows the analysis of individual characteristics of voting behavior

was gathered in Switzerland in the year 2000, when Swiss citizens voted on three proposals for taxes

on fossil energy. [54] analyzed the data and found that political affinity and education played a role in

voter behavior. Both citizens with an affinity to green and left-of-center parties and citizens with

higher education had higher rates of participation in the vote and also of approval of the tax proposals,

whereas income—ceteris paribus—did not significantly influence voting behavior.

In another analysis of the votes on the three Swiss proposals, [55] found that socially accepted

norms and ideology do play a role in the referendum outcome and that price and/or income effects are

not the only factors taken into account by voters.

From the values of social discount rates given in the literature, it appears that voters care more

about the here and now than about the future: In an overview of relevant papers, [56] reports values

varying between 3 and 6%, where any social discount rate above 0% implies that a higher weight

(importance) is given to earlier generations than to generations in the distant future [57]. [42] calculate

a public discount rate of nearly 1%. Even though there is an ongoing dispute in the literature about the

use, morality and size of social discount rates, especially in view of the costs of fighting climate

change [58], there is a widespread tendency to assume that voters at least to some extent, attach more

value to the present than to some unknown future. Most interestingly, [41] find that parents worry

significantly more about CO2 emissions than citizens without children, which is another argument in

favor of a non-zero inter-temporal discount rate.

Summing up our discussion, we find three main issues that may explain why voters do not

explicitly vote for the environment: firstly, the provision of the public good ‘environment’ allows

free-rider behavior, secondly, the time delay between costs and benefits of environmental policies

(especially CO2 emission reduction) is difficult to explain and non-zero social discount rates diminish

the future’s importance and finally, other more urgent issues, like unemployment or security, are of

higher priority than less tangible environmental issues.

3.2. The Politicians

We now turn to analyzing the behavior of politicians and their position concerning the introduction

of market-based instruments. The main questions that need to be discussed are whether politicians are

intrinsically motivated to engage in environmental policy, and whether they favor market-based

instruments or command-and-control mechanisms.

The standard political economy approach assumes self-interested behavior of utility-maximizing

politicians, where utility is gained by being re-elected [59] and by reaching certain ideological policy

goals. If re-election is the maximizing condition, a politician will promote a certain policy only if the

median voter demands it and is willing to pay for it (see [60] for a formal discussion of the median


3723

voter model and [61] for an empirical discussion of how the national median voter’s willingness to pay

determined the outcome of the Kyoto negotiations). [62] argues that politicians are intrinsically

motivated to implement instruments that are in line with their political ideology and increase their

power or their personal income. Whether or not they can follow their own inclinations or have to

comply with the median voter’s demands depends on how stringent the re-election constraint is. Then

again, [63] argue that the re-election constraint may be valid only for major political topics like overall

government spending or income distribution, it may be less important for secondary issues like

environmental policy: a view that is also supported by [64].

The question whether or not the re-election criterion is an important factor in a politician’s decision

to engage in environmental policy can also be discussed in connection with the partisan hypothesis, to

the effect that the re-election constraint is stringent only in election times, but does not influence the

politician’s decisions throughout his term (see [65] and [64] for a review of empirical studies of

partisan cycles and [60] for a formal approach to the partisan model).

According to [66] the governing party that aims to stay in power will seek to please the median

voter only if its self-perceived re-election chances are low. If its self-perceived re-election probability

is high, it will undertake policies in line with its ideology. As we stated above, politicians want to be

re-elected, to have power and to receive benefits. What does that mean for a politician’s intrinsic

motivation to pursue environmental policies? Firstly, as our discussion in Section 3.1. showed, voters

value the environment but do not have complete information about environmental issues, their

importance and the toolkit of instruments that can be used. They also fear being overly burdened

financially. Furthermore, following the argumentation of [63] environmental issues may be of only

secondary interest to the median voter, but if secondary issues do not influence the median voter’s

election decision, there may be voters who attach extraordinarily high importance to such issues. A

politician may therefore be inclined to pursue this secondary policy in order to receive additional

votes. Furthermore [63], who empirically analyzed U.S governors’ public spending and environmental

policies, found that “in states with a large group of green voters […] governors advance less

environmentally friendly policies once they face a binding term limit.” They also “[…] observe the

opposite pattern in states with a small environmental constituency, where governors advance much

greener policies once they can no longer be re-elected.” They interpreted their results as support for

their theory that politicians reverse policies they have pursued only to attract additional voters, and

conclude that secondary policy issues like environmental policies are strongly influenced by elections.

[62] also points out that politicians are not completely tied to the median voter’s demands, because

rational voters acquire political information only up to the point where the marginal cost of acquiring

additional information equals the marginal benefits. As the single voter’s influence on an election

outcome is marginal, this benefit from acquiring information is marginal, too. In consequence, with

uninformed voters, politicians can pursue their own goals. This lack of information on the voters’

side offers scope for interest groups to influence politicians according to their own motives

(see Section 3.3.).

We find that politicians may be intrinsically motivated to implement environmental policies

especially to improve their chances of re-election. From this, the second question arises: If politicians

pursue environmental policies, do they favor market-based instruments or command-and-control

measures? There are three arguments in favor of market-based instruments. Firstly, we can reasonably


3724

assume that politicians are better informed about market-based instruments and their comparative

efficiency advantages over command-and-control measures.

Secondly, market based instruments like taxes increase—compared to command-and-control

measures like standards—the government’s revenue, which provides leeway for reducing other taxes

or for financing other projects that may be of primary interest to the median voter and thus increase the

chances of re-election.

Thirdly, environmental taxes or permit systems may be easier to explain to the public than other

taxes because they can be labeled as punishment for polluters [12]. And finally, as [67] point out,

politicians may favor market-based instruments, as they have some control over defining winners and

losers from a specific policy.

We now turn to arguments in favor of command-and-control measures:

Firstly, a utility-maximizing politician is also likely to pursue a policy that leads to immediate and

noticeable utility gains for the median voter, while its costs are as invisible as possible. In contrast to

market-based instruments, command-and-control mechanisms have the advantage of less visible

costs [30,62], and can probably be supplied at a lower cost [31].

Secondly, as discussed above, politicians will favor policies that improve their re-election

prospects, so they will try to please either voters or interest groups. Both of these (see Sections 3.1.

and 3.3.) may favor command-and-control measures. Voters are more familiar with these instruments

and interest groups have more leeway to pursue their own interest under a command-and-control

regime [68].

Thirdly, as [31] and [30] argue, command-and-control measures may serve as market-entry barriers

to new firms—standards for new products tend to be more stringent than for existing ones—and are

therefore favored by existing firms and by politicians who want to protect these firms.

In conclusion, after arguing that a self-interested politician may not be intrinsically motivated to

promote market-based instruments over command-and-control measures, but reacts to the other agents’

interests, the question arises whether such a policy—if put in place—will be carried out efficiently.

From our discussion so far, it follows that the design of a specific policy is strongly influenced by

interest groups whose motivations we will discuss in the following.

3.3. The Affected Producers and Interest Groups

To assess the influence of interest groups on the outcome of negotiations about the introduction of

market-based instruments in environmental policy, two aspects of lobbying power need to be

considered: firstly, the lobbyists’ strategy can aim at preventing an instrument’s use, and secondly, if

prevention is impossible, they can alter a policy’s design according to their individual preferences. [69]

goes on to distinguish between four categories of lobbyists which differ according to the services

they offer:

- service functions, i.e., the provision of specific (and often exclusive) services for their members

- lobbying functions, i.e., attempts to influence decision-making processes from outside

- decision-making functions, i.e., attempts to influence decisions from within

- implementation functions, i.e., participation in policy implementation


3725

The importance of organized interest groups derives from the need of detailed expert knowledge for

reaching educated decisions in environmental policy. At the moment, more than 2,700 organizations

and individuals are accredited as lobbyists at the European Parliament (accrediting is voluntary not

mandatory); 53% of them are «in-house» lobbyists and trade associations active in lobbying. [70]

defines a lobbyist as an “organization or individual that seeks to influence policy, but does not seek to

be elected” and points out “that lobbying is a familiar if not always welcome reality in western politics,

and that most political scientists and policy-makers recognize that public and private interests have a

legitimate and important role to play in the policy process”. That about 15,000 Commission and

European Parliamentary officials face 20,000 lobbyists in Brussels, which may serve as an indicator

showing that lobbying activities have to be considered a major influence on any political activity.

We argue that producers prefer command-and-control measures over market-based instruments in

environmental policy (see Sections 2.1. and 2.2.), which may go far to explain their restricted use. We

furthermore argue that green interest groups also favor command-and-control measures and have a

weaker position in the policy making process. In the following we analyze whether, from these

propositions, the restricted use of market-based instruments can be explained.

We assume that the lobbyists’ information is equally reliable; then the question arises which

characteristics of a group will make them more successful in pursuing their individual goals. Firstly,

producers’ lobbyists will have more financial backing than environmental advocacy groups. Most

interestingly, the so called Green-10, composed of the ten major environmental advocacy groups

(BirdLife International, Climate Action Network Europe, CEE Bankwatch Network, European

Environmental Bureau, European Federation of Transport and Environment, Health and Environment

Alliance, Friends of the Earth Europe, Greenpeace Europe, International Friends of Nature, and WWF

European Policy Office), receive substantial funding from the European Commission (excluding

Greenpeace whose policy is not to accept financial support from governments, the EU or industry).

The importance of any interest group’s budget is shown by [71]. He calculates within a regression

model encompassing data from 800 interest groups, that the probability to have weekly contact with

the European Commission is 50 % higher if an interest group has a budget of 7.5 million euro

compared to an interest group without a budget.

Secondly, with environmental issues, especially pollution control and alternative technologies, there

is a strong information asymmetry between producers’ lobbyists and environmental lobbyists.

Thirdly, [30] reckon that environmental interest groups object to market-based instruments in

environmental policy on philosophical grounds. In their line of thinking, permits and environmental

taxes are interpreted as “rights to pollute” and are therefore immoral. [31] adds that environmental

interest groups furthermore argue that the possible damages from pollution are difficult or impossible

to quantify and monetize, which prevents the calculation of an accurate tax rate.

Fourthly, as [72] famously described in his “Theory of Competition among Pressure Groups for

Political Influence”, group size matters: the smaller the group the more effectively it can lobby, which

is why business lobbying tends to be more effective than lobbying for consumers [73,74]). Public

interest groups (like environmental groups) are also relatively weak due to group size.

The relative strength of an interest group furthermore depends on a number of factors, such as

policy makers’ preferences and the cost/benefit ratio of the proposed regulation [75]. [20] illustrate this

in the context of the EU-ETS: The EU-ETS sectors which were represented by more powerful interest


3726

groups realized two positive outcomes: firstly, they got a preferential allocation of allowances in

comparison to other EU-ETS sectors, and secondly, they succeeded in lowering the overall abatement

burden within the EU-ETS, whereby abatement burden was imposed on non EU-ETS sectors and

overall economic efficiency was reduced. Concerning the position of green interest groups, [32] argues

that they prefer grandfathering of permits to auctioning and to emission taxes. He formulates a

two-stage model where, in the first stage, the type of policy is determined and in the second stage the

emission cap is set and shows that grandfathering increases the environmental policy groups political

influence and minimizes the emission cap [30].

In yet another example, [76] study the effects of a revenue-neutral tax reform which links ecological

taxes with reductions in labor costs. Using the German Ecological Tax Reform database, they find

substantial effects of lobbying, especially for sectors with a highly inelastic energy use. From an

efficiency point of view, the highest taxes should be imposed on these sectors; as this is known ex-

ante, these sectors also have the highest incentive to lobby for substantially reduced taxes, which may

well result in practice. Furthermore they show that interest groups’ effectiveness also depends on

market concentration and energy demand elasticities.

In an attempt to show how this resistance to environmental taxes could be overcome, [77] compares

different refunding mechanisms (income-tax cuts, extra public spending and tax-burden compensation

to polluters) and shows that by “lobbying for a refunding rule that pleases voters, the interest group can

reduce the ‘‘price’’ of buying a reduction in the green tax. In cases where the tax revenue can be used

to compensate the interest group’s members, this benefit must be sufficiently large to outweigh the

value of the foregone tax burden compensation. In cases where the tax revenue cannot be refunded to

polluters, the interest group has no direct stake in the refunding rule and will, therefore, support the

rule that voters prefer.” And [10] argue that “in heterogeneous sectors the tax revenue is difficult to

refund in a politically acceptable way. Energy-intensive firms will lose from taxation even with a full

refund, and are able to protest quickly and with success.”

We see that lobbyists of industrial and business interest groups are relatively better equipped to

influence policy making from an early stage on. The specific information and expertise of lobbyists is

a crucial factor in policy-making which strengthens the relationship between administrators and

lobbyists. On the other hand environmental lobbyists, suffer from group size and fewer financial

resources which in reality can even result in a situation in which the lobbyists are paid by the very

organization they lobby. [78] furthermore shows that lobbying behavior in the European Union

significantly differs between traditional and green interest groups. Traditional interest groups lobby

bureaucrats (in the European context, the European Commission) while green interest groups lobby the

European Parliament. From this we derive that traditional interest groups are more involved in early

stages of policy making than green interest groups and may therefore better influence the evolution of

a policy. Taking the EU-ETS as an example, [79] analyzed whether the final design of the EU-ETS

can be explained by potential industry winners or losers involved in the early stages of the policy

making process. Their answer is ambiguous because on the one hand industries’ main objective to

install a voluntary system was not realized, but on the other hand, lobbying leads to a policy design

that benefited industry more than any other policy design that could have been realized.


3727

3.4. The Public Bureaucracy

We now turn to analyzing the role of the administrative level of the political system. Administrators

necessarily play an important role in the preparation and early implementation of environmental policy

measures. According to Niskanen’s famous model of bureaucracy [80], the leader of any public

administration unit seeks to maximize his unit’s budget, increase the number of his employees, and

hence increase his power and importance (see [81] who provide empirical support for this notion). In

contrast to politicians administrators are also not bound by re-election constraints. If this holds true for

authority whether or not it is engaged in environmental policy, the result of budget-maximizing is that

environmental administrations are intrinsically motivated to implement environmental policy measures

which require the most administrative controls as well as exhibiting the highest costs [59]. We can also

assume that most members of “green” public authorities identify themselves with the goals of their

authority and are highly motivated. But being motivated need not necessarily lead to favoring

cost-efficient policy making. Especially with environmental policy that is largely tied to incentives that

need to be given to the regulated party, the inefficiency aspect of command-and-control mechanisms

also comes from the simple fact that administrators are not there to formulate or provide incentives or

to encourage and reward the regulated ones, not to speak of any innovation beyond compliance with

given requirements, as [33] point out.

When it comes to assessing whether public authorities are in favor of command-and-control

instruments over market-based instruments or vice versa, given budget-maximizing behavior, several

factors need to be considered: Firstly, command-and-control mechanisms exhibit high costs, since

monitoring them is labor-intensive; secondly, with command-and-control mechanisms the authority

has an information advantage that mainly derives from expert knowledge within the authority

compared to the government; thirdly, the authority simply knows what to do, which may not be the

case with a new instrument; and fourthly, public authority is needed for command-and-control

mechanisms, but may be superfluous if, say, a command-and-control mechanism is replaced by an

environmental tax, or this may at least require a great degree of flexibility within the authority [11,82].

Instead of continuously monitoring a large number of facilities, the use of taxes or tradable permits

reduces the information needs of the public authority or makes the information completely superfluous

in cases where the relevant powers are taken away from the authority completely. Obviously, as

information acquisition is resource-consuming, this is not necessarily in the interest of the authority [31].

Studies about the administrative costs of market-based and command-and-control instruments are

scarce. [83] estimates the start-up costs of the EU-ETS for Germany at about 7.5 million euro and the

recurrent costs at about 7 million euro p.a. In Germany nearly 1,900 emitters take part in the EU-ETS.

For Austria’s 200 emitters, the Austrian Federal Audit Commission calculated the costs of the EU-ETS

for the public administration at 2 million € in 2007. Comparing these figures, especially when they are

prepared by public officials, is difficult if not impossible (see e.g., [84] for an analysis of transaction

cost measurement systems). To the authors’ knowledge there is no literature comparing the transaction

costs of different environmental policy instruments.

In light of Section 3.3., we conclude that the affected producers and the public authorities are the

two groups with the strongest reasons to favor command-and-control policies. Also, both parties have

the political power and resources to influence the design of environmental policy.


3728

4. Concluding Remarks

In recent years the use of market-based instruments in environmental policy has steadily increased;

most notably the EU-ETS brought a major shift in the way environmental policy is implemented and

perceived. Yet still, the efficiency of the instruments in use is questionable, as their design seems to be

strongly influenced by the economic agents’ different interests. We used Public Choice theory to

differentiate between five economic agents, voters, politicians, producers, interest groups and

administrators, and considered the intrinsic motivation of each group in turn to find answers to the

question we posed in the title of our paper, “Why does environmental policy in representative

democracies tend to be inadequate?” Summarizing our public choice analysis, we draw the

following conclusions:

(1) While, in the past, command-and-control instruments successfully reduced tangible

environmental pollution (mostly in local areas) and improved the overall environmental quality in

Western democracies, the more threatening, but much less tangible global pollution arising from

CO2 emissions, obviously cannot be controlled with command-and-control measures. Furthermore,

economic theory shows the superiority of market-based instruments over command-and-control

measures in terms of efficiency. Still, experience so far with market-based instruments is sobering,

as regards both their frequency of use and their design and effects. The EU-ETS suffers from

conceptual weaknesses, as not only was grandfathering chosen as the allocation method instead of

auctions, but it also seems to have led to an over-allocation of tradable permits and to windfall

profits. The environmental taxes imposed in several European countries on fossil energy and CO2

emissions are used more to finance public spending and less as instruments in fighting climate

change or reducing environmental pollution.

(2) On the other hand, both political rhetoric and public discussion point strongly to the need to

fight climate change, and to the economic superiority of tradable permit systems or taxes over

command-and-control instruments. And the general public, the voters, attach great importance to

environmental quality—an empirical fact repeatedly verified in the studies we reviewed. The

growing body of literature about what influences happiness also shows the high positive correlation

between individual happiness and environmental quality. In addition, the more tangible

willingness-to-pay studies confirm these findings and show that parents have a higher willingness to

pay for CO2 emission reductions, which may be an argument in favor of a non-zero social discount

rate. The value that voters place on the environment surely is high, but we also mentioned that in

terms of everyday life, in which one’s job, income and security situation have more weight than less

tangible aspects, like CO2 emissions, people’s environmental morale or intrinsic motivation may

not be high enough for them to actively vote for the environment. Furthermore, the costs of fighting

climate change are imposed on today’s voters immediately, while it is future generations that will

benefit from this effort. While, as described above, altruistic behavior can surely be ascribed to part

of society, it may be less prevalent for environmental policy measures in society as a whole.


3729

(3) With a look at the affected producers and interest groups, we conclude that, all in all, traditional

(industrial) interest groups have every advantage over green interest groups: their group’s size is in

their favor and their financial backing is considerable. Both aspects work against the green interest

groups, who suffer from the simple fact that they represent the general public, so group size is an

issue and financing themselves is much more difficult (not least due to free-rider behavior).

(4) Considering the public administration, we conclude that administrators exhibit

budget-maximizing behavior which makes command-and-control measures more attractive to

them, because monitoring these is resource-intensive. Furthermore, they are in favor of

command-and-control instruments over market-based instruments for several other reasons:

command-and-control mechanisms exhibit high costs, there they have an information advantage

because they profit from expert knowledge within the authority compared to the government; the

authority simply knows what to do, which may not be the case with a new instrument; and the

public authority is needed for command-and-control mechanisms, but may be much less needed if a

command-and-control mechanism is replaced by market-based instruments such as an

environmental tax. We conclude that the regulated industries and public authorities are the two

groups who have the strongest reasons to favor command-and-control policies. Also, both parties

have the political power and resources to influence the design of environmental policy, which we

consider the main answer to the question posed in the title of our paper.

What can we derive from our analysis? Firstly, to increase the importance and influence of

voters/taxpayers one could push the idea of giving voters more rights, such as the introduction of a

referendum or the right to an initiative. Voters could then express their preferences on single issues

(like environmental ones) and force the government to undertake certain ecological measures. It is

important that power to set the agenda is then shifted from the government or bureaucracy to the

voters, too. As we see in Switzerland, the institution of the referendum or direct democracy has

worked quite effectively. Secondly, as we show in our discussion of voters’ motives and interests, a

persisting information asymmetry remains a major obstacle in environmental policy. Ongoing efforts

made especially on the European level, such as ‘green labels’ for food and non-food products, may

help voters to internalize environmental behavior and thus increase the pressure on producers.

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Why Does Environmental Policy in Representative Democracies Tend to Be Inadequate? A Preliminary Public Choice Analysis

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